Three years ago, during some of the darkest days of the Great Recession, the Rosemont-based bank holding company was clustered with two other local players, Chicago-based PrivateBancorp Inc. and MB Financial Inc., in an unofficial race to claim the vacated title of the city's top local bank.

Since then, Wintrust CEO Edward Wehmer has used a series of acquisitions of Chicago-area community banks, mortgage firms, and lenders to insurance buyers in the U.S. and Canada to build a sizeable lead while his main competitors have taken longer to emerge from the financial wreckage.

Now, with both PrivateBancorp and MB Financial on offense again and seeking deposit and loan growth, the question is whether either can overtake Wintrust. Given the lead Wintrust has built—in three years, it's grown 40 percent to $17 billion in assets and barreled into the ranks of the top five deposit holders in the Chicago market—observers say it probably will take a transformational deal for any other local player to catch up.

“Chicago is a great town,” Mr. Wehmer says. “It doesn't have its own bank. Why can't we be Chicago's bank? . . . This is the third-biggest city. It's a very proud city. It's very proud, but it's very parochial.”

The blunt-spoken CEO, who grew up on the North Shore, goes on to talk about out-of-town banks that market themselves as hometown lenders. “I don't like seeing PNC (Bank) at Bears games. The P stands for Pittsburgh. I don't like seeing (Cincinnati-based) Fifth Third (Bank). Fifth Third is the Reds.”

PrivateBancorp and MB Financial have $13.3 billion and $9.4 billion in assets, respectively. The next-biggest local player is Itasca-based First Midwest Bancorp Inc., with $8.2 billion. The largest deposit holders in the city—JPMorgan Chase Bank, BMO Harris Bank and Bank of America—all are owned by out-of-town holding companies. The city's fourth-largest deposit holder, Northern Trust Co., has its headquarters here but focuses on asset management and custody for wealthy families and institutions.

SNAPPING UP SMALL FRY

Much of Wintrust's growth has come through deal-making. Mr. Wehmer, 58, is happy to buy small community banks while other large players focus on bigger game. He also has been the most active acquirer of failed banks in the country, purchasing nine from the Federal Deposit Insurance Corp. over the past two years. In 2009, Wintrust had 71 branches, with none in the city. Now it has 105, with 14 in the city.

None of the three local banks has grown to the point where it can claim the crown that LaSalle Bank had before October 2007, when Charlotte, N.C.-based Bank of America Corp. bought it for $21 billion. LaSalle had more than $110 billion in assets and about a third of the city's commercial lending market at the time of its sale.

Wintrust still trails PrivateBancorp, helmed by former LaSalle CEO Larry Richman, in commercial lending. Nearly a third of Wintrust's $12.1 billion loan base is made up of a specialty line—financing big insurance purchases for companies and wealthy individuals.

Only in 2010, when Wintrust hired prominent veteran Chicago business lender John McKinnon from JPMorgan Chase & Co., did it begin to get serious about lending to midsized companies, a pillar of Chicago's economy. Its commercial loans have grown 75 percent in three years, to $2.8 billion. PrivateBancorp has $6.1 billion, more than twice as much.

From 2008 to 2010, Mr. Richman's PrivateBancorp was the big growth story in town. He and more than 100 bankers decamped from LaSalle as Bank of America was completing its takeover and settled at far smaller PrivateBancorp. Two years later, $4 billion in assets mushroomed to $12 billion, as a flood of former LaSalle business clients left B of A for PrivateBank.

But the rapid growth took place during the worst of the recession, and sour loans caught up with Mr. Richman. The bank's stock price tanked and the private-equity firms that financed the strategy saw their positions diluted badly by subsequent equity infusions to cover the loan losses. PrivateBancorp finally redeemed its $244 million in federal bailout funds last month.

But the bank's stock has partially recovered, and it has resumed growing. Net loans are up 7 percent, to $9.6 billion, in the first nine months of this year.

Five years into the job, Mr. Richman, 60, says, “I'm probably two years behind a five-year plan. At least it's a plan.”

PrivateBank still is winning former LaSalle clients—Mr. Richman says less than a quarter of the bank's clients this year are coming from Bank of America— but it sees plenty of opportunity to poach customers from other banks. And that's the primary way to grow right now because most businesses continue to shy away from adding debt. PrivateBank is on a pace this year to originate $375 million in new loans per quarter.

'NOTHING IS IMMINENT'

While the industry awaits an expected deal-making wave as banks slowly recover, Mr. Richman says acquisitions aren't at the top of his priority list, despite having just 19 branches. “There probably will be a consolidation over time. Nothing is imminent,” he says. “The best use of our capital is to grow the kind of clients we're growing.”

At MB Financial, CEO Mitchell Feiger, 54, says he isn't in a race to be the biggest bank in town. The company purposefully is keeping below $10 billion in assets to avoid fee restrictions and insurance payments mandated by the federal Dodd-Frank financial reform law that would cost the bank up to $7 million in annual revenue.

MB Financial has had to dig out of a mountain of bad debt. From 2008 until Sept. 30, MB Financial wrote off $655 million in loans, 12 percent of what it had at the end of 2007, according to research by investment bank Sterne Agee & Leach Inc. PrivateBancorp, the worst-hit of any of the local midsized players, wrote off $654 million, or 16 percent, in that period. Wintrust, on the other hand, cashiered $437 million, or just 6 percent.

But excluding loan-loss reserves, MB is the most profitable of the three banks. Mr. Feiger acknowledges his bank isn't growing like the others, but it's boosting fee revenue and with 90 branches has what is by all accounts a valuable deposit franchise. He's wary of the price war as banks woo new business customers.

“Is it crazy? Not yet,” he says. “It will get there.”

Referring to the Federal Reserve Board's intention to preserve ultra-low interest rates that are pressuring bank profit margins, he sighs, “We've got three more years of this. . . . For people who grow very fast in the financial services business, a lot of times the end result is not very good. We're interested in providing a good return for our shareholders. It's not growth at any cost that produces that.”

(Editor's note: This story has been updated to reflect the percentage of net charge-offs for MB Financial since the beginning of 2008.)